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May 4, 2012

IPO Failure : Samvardhana Motherson Finance Ltd issue closed today with just a shade over 23% subscription…BRLMs Standard Chartered Securities and J P Morgan India and Selling Shareholders decide not to proceed with the Issue

1 Comment / Automobiles, Controversies, Holding Companies, Interesting News Sightings, Investing Approaches, Investing Themes, INVESTOR MISTAKES, IPOs, Reflections, Sectors, Sensex, STOCKS, VALUATION / By

The Idea of this Blogpost is not to rub salt on the wounds but to again expose the twins Greed and Fear that characterize our markets …either the two BRLMs grossly overestimated their own ability or they grossly underestimated the intelligence of Investors or both !

IPO of Samvardhana Motherson Finance Issue closed today grossly undersubscribed...The Two Book Running Lead Managers Standard Chartered Securities (I) Ltd and J P Morgan India Pvt Ltd and the Selling Shareholders seeing this situation have decided this evening not to proceed with this Issue…as if they had any choice in this matter,as even date extension would have not helped the issue succeed !

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Samvardhana_Motherson_Finance_Ltd_040512.pdf

Of 127696518 Equity Shares available for subscription in the book building range of Rs 113 to Rs 118,only 29586650 shares were bid for as below….that’s just a shade over 23% subscription

Bid and Quantity for Samvardhana Motherson Finance Ltd

Cumulative (BSE+NSE)

Last updated on
Friday, May 04, 2012  5:15:00 PM
Price(Rs.) Cumulative Quantity
113.00     29586650    
114.00     27811400    
115.00     27810850    
116.00     15817050    
117.00     15816200    
118.00     15816100    
Cut-off     587250    

I’m assuming it was the BRLMs that guided the Company in the IPO Pricing Band of Rs 113 to Rs 118…..if so,they need to be pulled up by the Company for having mislead them for such a high Pricing Band,given the Market Sentiment prevailing ….Such Pricing left nothing on the table for Investors and was largely instrumental in the IPO not succeeding

A Good and Costly Lesson Learnt of the Consequences of  Mispricing IPOs in a Challenging Environment….Samvardhana Motherson Finance should have priced the IPO much lower  in the Rs 75 to Rs 80 band or else awaited better times if they were keen to launch the IPO at higher Pricing like they just unsuccessfully did

When reviewing this Issue and the Prospectus I had found the Pricing high and was skeptical of the IPO sailing through,more so as it was a fairly big issue of over Rs 1500 crs …seems I was right….expect BRLMs to blame Sentiment and not the IPO Pricing for this Failure !

As for the Macro Picture,all those who have been in touch with me or following my blog in the recent past will have sensed why I was not excited and  why I thought 17000 Sensex will break on the downside like it did scaringly today…1.87% and 320 points down to 16831…The Month of May looks ominous for the Markets…so sell and go away in May as they say…take a vacation…if you can afford it though !

President of India must be a Non Political Appointee….never is !

2 Comments / Chuckle !, Controversies, Corporate Governance, Insider Trading, Inspiring and Motivating, Interesting News Sightings, Reflections, When the Heart Explodes through the helpless Mind / By

President of India must be a Non Political Appointee….never is !…note I’ve asserted ‘must’ and not ‘should’

Irony is that we are not asking this question on the criteria above

“WHO  MUST become the  President of India after current incumbent finishes her term in July 2012?”

but instead speculating on political lines

“WHO WILL become the President of India after current incumbent finishes her term in July 2012?”

In my View,the President should always be a Non Political Appointee of Impeccable Stature…save for Kalam, none has really been or seen as been so far…surely in a country of 1.2 billion we can shortlist atleast five such who are deserving to be our President !

In an interesting recent conversation in this context with a Bengali friend,where I playfully jibed that I could see the Babu Moshai brethren effect rallying support  for our Finance Minister and Long Loyal to Congress,Pranab,here are his thoughts

“Kalam is the first choice. Ratan Tata is another one. The present real-politic structure now will never, ever, tolerate a non-political president – there is too much to hide – and when push comes to shove, politicians, across party lines, stick to each other just like a fart sticks to its own stink. And I totally agree with you in all you have said. In a nation of a billion plus, we couldn’t find anyone at all – except little Pranab; but he’s certainly better news than another P…. or worse, a P….!”

I reproduce this from Ayn Rand,famous for ‘Fountainhead’ who said it well in ‘Atlas Shrugged’

“When you know that in order to produce, you need to obtain permission from men who produce nothing,

When you see that money is flowing to those who deal not in goods but in favours,
 When you see that men get rich more easily by graft rather than by work,

and your laws no longer protect you against them but protect them against you…… you know that your society is doomed “

Sadly,it’s not Always the Best Man or Woman who wins !

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